NEW YORK (NYTIMES) - Martin Shkreli, 34, has confidently courted controversy in recent years, bulldozing his way into Wall Street and the drug industry, raising the price of a lifesaving drug by 5,000 per cent overnight, boasting that he would outwit prosecutors in his federal fraud case, and live-streaming and tweeting throughout his five-week trial.
But on Friday (Aug 4), after five days of deliberations, jurors convicted him on three counts of fraud in federal court, and he now faces up to 20 years in prison on each of the first two counts, and up to five years on the final count.
Shkreli looked shaken as the judge read the verdict. But not long after, he appeared outside court and returned to form, saying that he was "delighted, in many ways", with the verdict. "This was a witch hunt of epic proportions, and maybe they found one or two broomsticks," he said.
Later in the afternoon, he was live-streaming once more, sipping beer and joking about prison life from his Manhattan apartment.
In the five-week trial in the US District Court in Brooklyn, Shkreli was accused of securities and wire fraud related to two hedge funds he ran, MSMB Capital and MSMB Healthcare.
Prosecutors charged he illegally used a pharmaceutical company he founded, Retrophin, to repay defrauded MSMB investors. And they said he secretly controlled a huge number of Retrophin shares.
He never seemed to take his case seriously, meeting with federal authorities without a lawyer, making faces during testimony, calling the prosecution "junior varsity" and reading a book during final statements.
Jurors convicted Shkreli of three of the eight counts: securities fraud in connection with his hedge fund MSMB Capital; securities fraud in connection with MSMB Healthcare; and conspiracy to commit securities fraud related to the Retrophin stock scheme, in which he tried to quietly control a huge portion of Retrophin stock.
He was acquitted of counts one and two, conspiracy to commit securities fraud and conspiracy to commit wire fraud regarding MSMB Capital; counts four and five, the same charges with MSMB Healthcare; and count seven, conspiracy to commit wire fraud with regard to defrauding Retrophin by using funds from it to pay MSMB investors.
Count seven carried the most weight for sentencing, charging Shkreli with defrauding Retrophin by creating sham consulting agreements and unauthorised settlement agreements to pay back MSMB investors. It was associated with the biggest loss, which judges take into account when deciding sentences in fraud cases, Shkreli's lawyer, Benjamin Brafman, said afterwards.
As Judge Kiyo Matsumoto read the verdict, Shkreli, wearing a black polo shirt and khakis, sat with his arms crossed. He showed outward relief when Matsumoto said he was not guilty on count seven, mouthing "Yes" and patting Brafman on the back.
When she said he was guilty of count eight, the Retrophin securities-fraud conspiracy, he hung his head.
After the verdict was read, he gathered in a circle with his lawyers, looking a little shaken, then pulled on a hoodie. By the time he got outside court, where he gave his statements, he was smiling and speaking smoothly.
Bridget Rohde, the acting US attorney for the Eastern District of New York, the federal prosecutors' office in Brooklyn, said she was gratified by the verdict. "Our work is not done: Mr Shkreli remains to be sentenced, and there's a co-defendant in the case," she said, referring to Evan Greebel, Shkreli's onetime lawyer, who is scheduled to be tried in the fall.
A sentencing date was not set; Matsumoto said she would wait for submissions from both sides on how much money was lost. She set a fall date for those submissions. Brafman said the defense might ask for no prison time.
Jurors, who deliberated for five days and sent only one substantive note in that time, were never deadlocked, according to one juror, who spoke after the verdict on condition of anonymity because he said he did not want to be associated by name with the case.
He described the deliberations as methodical and logical and said the jurors had focused on whether Shkreli had intended to harm investors who gave him money.
The jury voted to convict on counts in which they saw fraudulent intent to take money, the juror said.
At Shkreli's trial, prosecutors, defence lawyers and witnesses provided sharply different takes on the defendant as they described how he rose from an ambitious young hedge fund manager to a notorious pharmaceutical executive.
The prosecution brought forth an "avalanche" of evidence, as the prosecutor Jacquelyn Kasulis put it in her rebuttal argument, that Shkreli illegally used Retrophin to repay the defrauded MSMB investors.
The evidence included a threatening letter he sent to the wife of a former employee; statements he sent to MSMB investors showing great returns at the same time he had no money in fund accounts; three versions of a backdated agreement to make it look as if MSMB Capital had invested in Retrophin when it had not; and claims about assets under management that were wildly out of line with his actual fund size.
"It's time for Martin Shkreli to be held accountable," she said.
His lawyers focused on the fact that his investors ultimately made back much more than their initial investments. They said that was proof that Shkreli had never intended to commit fraud. Instead, they said, he worked hard to get Retrophin off the ground so he could reimburse MSMB investors.
"He did it, and it worked, and they got paid," Brafman said in his closing statement. "When they got the financing, they started to pay these people, not to loot Retrophin." However, prosecutors said that paying Shkreli's old investors was not the responsibility of Retrophin, a public company, and that Shkreli had misled his MSMB investors. "Lying to people to get them to invest with you is fraud," Kasulis said in her final statement.
Shkreli is the child of Albanian immigrants. He was raised in Brooklyn and attended Hunter College High School, one of the city's elite public schools. He went to Baruch, one of New York's city colleges, and landed an internship at Cramer Berkowitz, going on to other money-management jobs.
As he recruited investors for his own funds, MSMB Capital and MSMB Healthcare, he was cunning at times, almost a shape-shifter. He told an investor who had not graduated from college that he had not finished college either, according to testimony. To an established Texas investor, he said he had graduated young from Columbia. He told another investor, in an email chain about Steve Jobs, a college dropout, that he had dropped out of Columbia.
His lawyers painted him as an oddball who did not brush his teeth and slept in a sleeping bag at his office.
Before the trial, Shkreli was perhaps best known for increasing the price on the drug Daraprim, which treats a parasitic infection, to US$750 (S$1,017) a tablet from $13.50, when he was the chief executive of Turing Pharmaceuticals in 2015.
The public and politicians vilified him for the price increase, but his online supporters hailed him as "Pharma bro". Shkreli responded to the outcry by buying another drug and saying he would raise the price on that one, too.
Documents entered into evidence throughout the trial showed Shkreli as devil-may-care. At one point, Greebel, Shkreli's co-defendant and former lawyer, wanted to have a phone call with him about an issue involving lawyer-client privilege, and Shkreli responded, "Not available by phone ever Sorry."
During his post-verdict livestream, Shkreli, sipping from a bottle of India pale ale, speculated that his sentence would be "close to nil" and said that he was not anticipating spending time in a maximum security facility, adding "this is not 'Oz' or 'The Wire'." Rather, he said, he imagined serving in what he termed "Club Fed", playing basketball, tennis and Xbox, and resurfacing "back out on these streets very quickly".